Planning My First BRRRR - All Cash or Finance

[Lucas Schlund]

I have been learning about real estate and investing for about a year now. I have bounced around between various plans and strategies that I want to pursue. Finally, I realized I just had to commit to one, and I landed on doing a BRRRR.

My question is - Does your first BRRRR need to be all cash or can you finance it? I am looking to invest in single-family home in the Detroit / Metro Detroit area. My goal is to save up 80k cash and get into a deal that I can cover 100% with my own cash.

Currently, I have 30k saved up, do I just keep saving until I have enough cash to do my first deal? Or are there other options involving financing that will help me get my foot in the door sooner?

[Michael Smythe]

@Lucas Schlund there are logically, 3 options:

1) Buy Cash:
PROS: You can get better prices on houses because you can close faster with motivated sellers and buy houses that need repairs to qualify for a mortgage (less buyer competition)
CONS: takes the longest to save the funds

2) Use Rehab Loan:
PROS: Same as #1
CONS: more expensive loans:
---FHA 203(k): not that expensive, but must live in the property for 12 months before renting
---DSR Rehab loan: relatively expensive and may need experience to qualify

3) Mortgage on Property with Cosmetic Repairs:
PROS: easiest & cheapest to do
CONS: lots of competition, so can be hard to find a "deal"

PM us if you'd like to discuss these in more detail.